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What Has Happened Since QE Ended?

| April 05, 2016
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Last week in our monthly/quarterly wrap up, we also noted that the S&P 500 had gone virtually nowhere over the past five quarters. In fact, from the end of the fourth quarter of 2014 to the first quarter of 2016, the S&P 500 gained a total of 0.84 points. Yet, over that same time frame, it moved a total of 4,735.26 points. That’s a whole lot of volatility, without a lot to show for it. Today we’ll take a closer look at this.

There are many reasons the S&P 500 has stalled. Oil prices and the U.S. dollar’s impact on corporate profits are among the most important. Uncertainty about global growth and moving later into business cycle has also likely contributed. Although the Fed’s actions to end quantitative easing (QE) in October 2014 and start a new rate hike cycle in December 2015 may have contributed to increased volatility, interest rates have remained low and it’s unlikely that these decisions were a key driver of a flat stock market.

Lastly, the 0.84 point gain is the smallest move for the S&P 500 over five quarters since the fourth quarter of 1994 at 0.54 points. That kicked off a big bull market that lasted five years. Although we don’t know if that will happen this time, we do know that things don’t stay flat forever. Our call coming into this year was for mid-single-digit gains for equities,* amid higher volatility. With three quarters to go in 2016, we still feel that may be the case.

A Whole Lot of Volatility, Yet Not Much to Show for It


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